U.S. factory output boosted by machinery, auto production

WASHINGTON, May 17 (Reuters) - U.S. factory output expanded
in April as makers of machinery and cars posted solid increases
in production, a sign that the country's manufacturing sector
was resisting the downward pull from sputtering global growth.

Manufacturing output rose 0.3 percent, the Federal Reserve
said on Tuesday. The reading matched the gain expected in a
Reuters poll of economists.

Overall industrial output rose 0.7 percent last month,
beating the consensus forecast of a 0.3 percent gain, as
utilities output rebounded from March when it was restrained by
warmer-than-usual weather.

Mining output, another component of total industrial
production, fell 2.3 percent in April.

The gain in factory output, coming after recent strong
retail sales data, bolsters the view that the U.S. economy could
re-accelerate in the second quarter after growing sluggishly in
the first three months of the year.

The industrial sector has been undermined by a slowing
global economy and robust dollar, which have eroded demand
for U.S. manufactured goods. Manufacturing output has been flat
or negative in four of the last six months.

But there are signs the worst of the industrial sector's
downturn is over, with recent manufacturing surveys turning
higher. In addition, the dollar's rally has fizzled and oil
prices appear to be stabilizing.

Last month, production of long-lasting manufactured goods
increased 0.6 percent. The largest gains in manufacturing came
from producers of machinery, who increased output by 2.4
percent. Production of motor vehicles and auto parts increased
1.3 percent.

With output increasing last month, industrial capacity use
jumped 0.5 percentage point to 75.4 percent.

Officials at the Fed tend to look at capacity use as a
signal of how much "slack" remains in the economy and how much
room there is for growth to accelerate before it becomes
inflationary.
(Reporting by Jason Lange; Editing by Paul Simao)